Question

FUNCTION OF BANK IN INDIA

Answer 1

The bank has two types of functions ---- Primary function and Secondary function

● Primary Functions of Banks

The primary functions of a bank are also known as banking functions. They are the main functions of a bank.
These primary functions of banks are explained below.

1. Accepting Deposits

The bank collects deposits from the public. These deposits can be of different types, such as :-

♡ Saving Deposits

♡ Fixed Deposits

♡ Current Deposits

♡ Recurring Deposits

2. Granting of Loans and Advances

The bank advances loans to the business community and other members of the public. The rate charged is higher than what it pays on deposits. The difference in the interest rates (lending rate and the deposit rate) is its profit.
The types of bank loans and advances are :-

♡ Overdraft

♡ Cash Credits

♡ Loans

♡ Discounting of Bill of Exchange

● Secondary Functions of Banks

The bank performs a number of secondary functions, also called as non-banking functions.
These important secondary functions of banks are explained below.

1. Agency Functions

The bank acts as an agent of its customers. The bank performs a number of agency functions which includes :-

♡ Transfer of Funds

♡ Collection of Cheques

♡ Periodic Payments

♡ Portfolio Management

♡ Periodic Collections

♡ Other Agency Functions

2. General Utility Functions

The bank also performs general utility functions, such as :-

Issue of Drafts, Letter of Credits, etc.

♡ Locker Facility

♡ Underwriting of Shares

♡ Dealing in Foreign Exchange

♡ Project Reports

♡ Social Welfare Programmes

♡ Other Utility Functions

Answer 2

Explanation:

Functions of Commercial Banks: - Primary functions include accepting deposits, granting loans, advances, cash, credit, overdraft and discounting of bills. - Secondary functions include issuing letter of credit, undertaking safe custody of valuables, providing consumer finance, educational loans, etc.